Gagah Motors Enterprise., a producer of turbine generators, is in this situation: EBIT = RM4 million, tax rate = T = 35%, debt outstanding = D = RM2 million, rd = 10%, rs = 15%, shares of stock outstanding = No = 600,000, and book value per share = RM10. Because Gagah’s product market is stable and the company expects no growth, all earnings are paid out as dividends. The debt consists of perpetual bonds. Required: What are Gagah’s earning per share (EPS) and its price per share (P0)? What is Gagah’s weighted average cost of capital (WACC)?
Gagah Motors Enterprise., a producer of turbine generators, is in this situation: EBIT = RM4 million, tax rate = T = 35%, debt outstanding = D = RM2 million, rd = 10%, rs = 15%, shares of stock outstanding = No = 600,000, and book value per share = RM10. Because Gagah’s product market is stable and the company expects no growth, all earnings are paid out as dividends. The debt consists of perpetual bonds. Required: What are Gagah’s earning per share (EPS) and its price per share (P0)? What is Gagah’s weighted average cost of capital (WACC)?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Gagah Motors Enterprise., a producer of turbine generators, is in this situation: EBIT = RM4 million, tax rate = T = 35%, debt outstanding = D = RM2 million, rd = 10%, rs = 15%, shares of stock outstanding = No = 600,000, and book value per share = RM10. Because Gagah’s product market is stable and the company expects no growth, all earnings are paid out as dividends. The debt consists of perpetual bonds.
Required:
- What are Gagah’s earning per share (EPS) and its price per share (P0)?
- What is Gagah’s weighted average cost of capital (WACC)?
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